Negotiating Golbally
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Managing successful cross-cultural negotiations!
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Negotiating Golbally
- 1. TIPPING THE SCALE IN OUR FAVOR THE PERSUADERS NEGOTIATING GLOBALLY By Melissa Egan, Joanne Lieu, Jeremy Rome, and Alexandru Caratas
- 2. WHAT IS NEGOTIATION? • Negotiation is a process in which at least one individual tries to persuade another individual to change her or her ideas or behavior • Business Negotiations usually involve one party trying to influence another party to make a particular decision or sign a contract. WHEN DOES A NEGOTIATION BECOME CROSS- CULTURAL? • When the parties involved belong to different cultures and do not share the same ways of thinking, feeling, and behaving • All global negotiations are cross cultural, some domestic
- 3. WHY IS CROSS-CULTURAL NEGOTIATION IMPORTANT? • Single most important business skill • Global managers spend more than 50% of their time in formal and informal negotiations • Poor communication and cross cultural misunderstandings can all have harmful consequences • Negotiation and persuasion styles vary highly across cultures
- 4. STYLES OF NEGOTIATION VARY ACROSS CULTURES • Emotional sensitivity is highly valued • Hides emotions • Demonstrates loyalty towards employer • Group decision made by consensus • “Face-Saving” is crucial • Non Argumentive, Quiet when right • Written statements must be accurate and valid • Focused on good of the group Japanese
- 5. STYLES OF NEGOTIATION VARY ACROSS CULTURES • Emotional sensitivity is not highly valued • Very straight-forward • Little commitment towards employer • Team provides input to decision maker • “Face-Saving” is not important • Argumentative but impersonal • Give importance to documentation as evidence • Profit motive or individual benefit is aim North American
- 6. STYLES OF NEGOTIATION VARY ACROSS CULTURES • Emotional sensitivity is valued • Emotionally expressive and passionate • Loyal to employer (often is family) • Decisions come from one individual • “Face-Saving” is crucial • Argumentative and passionate when right or wrong • Impatient with documentation (obstacle) • Good of group is good for individual Latin American
- 7. CLASS ACTIVITY • 3 Volunteers • Engage in Negotiation Process • The rest of the class are observers
- 8. WHEN SHOULD WE NEGOTIATE? • Negotiation is not always the best way to doing business • “Take it or Leave it” Strategy can sometimes be better (take less time, etc) CONSIDER NEGOTIATION WHEN THESE CONDITIONS EXIST:
- 9. HOW TO NEGOTIATE SUCCESSSFULLY? • Depends on 3 things: People, Situation, and Process • Negotiators have most control over the “Process” – strategy and tactics QUALITIES OF A GOOD NEGOTIATOR Varies by culture
- 10. HOW TO NEGOTIATE SUCCESSSFULLY? • Situational contingencies influence success as much as individual characteristics, but they are rarely as critical to success as the strategy and tactics used • Location: Meet at your place or at a neutral location • Physical Arrangements: sitting face-to-face encourages competition. Sitting at a right angel facilities cooperation. • Participants: Go it alone or bring your team? Depends on cultural context. • Time Limits: is one party limited to a time constraint? • Status Differences: Do they value titles, formalities, age, etc
- 12. STAGES OF A NEGOTIATION 3 approaches to each stage: 1. Traditional Approach – Competitive 2. Principled Approach – Collaborative/Individual 3. Synergistic Approach – Collaborative/Cultural
- 13. PLANNING & PREPARATION Planning behavior of successful negotiators: • Planning time: quality over quantity • Exploring options: look for a wide array of actions and outcomes • Establishing common ground: look for similarities rather than differences • Long Term vs. Short Term: place greater emphasis on long term issues • Setting limits: set a range of objectives for greater flexibility • Issue vs. Sequence Planning: discuss each issue independently
- 14. INTERPERSONAL RELATIONSHIP BUILDING • Similarities become basis for relationship building • Separate people from the problem • Example: Americans are very task-orientated – Want to get straight to business with little time spent on getting to know the other party – Place great value on the written contract – Many other countries place higher value on relationships vs. contracts
- 15. EXCHANGING TASK-RELATED INFORMATION • Stating a position restricts the ways in which your interests can be met • Focus on interests to gain greatest range of mutually acceptable solutions • Communication barriers significantly affect understanding and outcomes • Implement role reversal to appreciate other party’s point of view
- 16. PERSUADING • Effective negotiators regard their counterparty’s issues as their own • Emphasize creating mutually beneficial options by: – Understanding party’s interests, values, and needs – Pinpoint areas of similarity and difference – Generate new options based on party differences • Opportunities for developing mutually beneficial solutions greater in cross-cultural negotiations than single-cultures
- 17. MAKING CONCESSIONS & REACHING AGREEMENT • Use objective criteria rather than “dirty tricks” • Those who make concessions earlier in the negotiation are disadvantaged • Example: Americans negotiate sequentially – Make small concession throughout the negotiation – Asian countries prefer to discuss all issues prior to making any concessions – Russians make little to no concessions
- 18. Discussion Question What similarities/differences can you identify between the various negotiation processes presented here, and typical negotiation practices in your country?
- 20. NEGOTIATING TACTICS • Includes verbal and nonverbal tactics • Words communicate 7% of meaning • Tone of voice communicates 38% • Facial expression 55% • “It’s hard to read the writing on the wall if you don’t know the language, much less where to find the wall”
- 21. VERBAL TACTICS INITIAL OFFERS • Different Opening Strategies (Russia Sweden) • What do extreme initial positions show us? – Demonstrate that the counterpart will not be exploited – Allow the negotiator to gain more than expected – Prolong the negotiating process – Modify the counterparts’ beliefs about the negotiators preferences – Create more room to make subsequent concessions exhibit cooperation – Communicate the negotiator’s willingness to play the game according to the norms
- 22. RANGE OF TACTICS Tactic Description Example Promise Conditional/ positive I will lower the price if you ... Threat Conditional/negative I will walk out of this meeting if you ... Recommendation Third party positive If you lower your price, more teenagers will ... Warning Third party negative If you settle, the press will ... Reward Unconditional/ positive I‘ll buy you a coffee
- 23. RANGE OF TACTICS Tactic Description Example Punishment Unconditional/negative I refuse to listen to your screaming. I‘m leaving Normative Appeal I appeal to a societal norm Everybody else buys our product for $5 per unit Commitment Unconditional/positive I will deliver 100 units by June 15 Self-Disclosure I will tell you something about myself We really need to sign a major contract by the end of the year Question I ask you something about yourself Can you tell me more about your brazilian operation? Command I order you to do something Lower your price
- 25. VERBAL BEHAVIOR Irritators Counterproposals Behavioural Labeling Defend/attack spiral Active Listening Questions Feelings Commentary Argument Dilution
- 26. NONVERBAL TACTICS Touching Conversational Overlaps Silence Facial Gazing
- 27. NONVERBAL TACTICS How you reduce the use of dirty tricks • Not using them yourself • Recognising them when your counterparts use them, explicitly pointing them out establish the rules of the game • Knowing what the best alternative is to a negotiated solution • Realizing that tactics that appear dirty to people from another culture may be acceptable to your team
- 28. WHOSE STYLE TO USE?
- 29. Discussion Question What verbal and nonverbal negotiating tactics are most frequently used in Austria and why?
- 30. HOW NEGOTIATORS GET TO YES Catherine H. Tinsley
- 31. GENERAL “Managing conflict is critical for sustaining organizational efficiency and effectiveness” • Conflict management strategies of Japanese, American and German subjects – USA: focus on interests polychronicity – GER: focus on regulations explicit – JPN: focus on status power hierarchy • Persuasion was relatively universal, persuasive arguments differ
- 32. CONFLICT MANAGEMENT STRATEGIES • Integrating interest – cognitive problem solving – Prioritize interests & trade-off • Applying regulation – relying on mutual standards & regulations – Connecting proposal with universal standards • Deferring status power – Force conciliation on basis of social status – Quick solving to avoid social disruption
- 33. VALUES CONGRUENT WITH STRATEGIES Interest strategy: individualism, egalitarianism, polychronicity Hypothesis 1: Values for individualism and polychronicity are positively correlated with each other and each negatively correlated to hierarchy Regulations strategy: explicit contracting, egalitarianism Hypothesis 2: Value for explicit contracting positively related, value for hierarchy negatively correlated to regulations strategy Power strategy: hierarchy, collectivism, low explicit contracting Hypothesis 3: Values for hierarchy are positively correlated, values for individualism and explicit contracting are negatively correlated to power strategy
- 34. CONSTELLATION OF STRATEGIES • Hypothesis 4a: The interest strategy will be used most by American negotiators, then German negotiators, then Japanese negotiators • Hypothesis 4b: The regulations strategy will be used most by German negotiators, then American negotiators, then Japanese negotiators • Hypothesis 4c: The power strategy will be used most by Japanese negotiators, then German negotiators, then American negotiators
- 35. METHOD • 104 business people: 38 Japanese, 36 Germans, 30 Americans • CASE: engineering director hired 2 interns, violating the HR director’s summer intern programme • ISSUES: a. Whether students will be part of the HR programme b. Who would pay for their salary c. Who would hire interns in the future d. Intern qualifications e. Timing of hiring f. Use of an orientation programme g. Continuation of a membership programme
- 36. ANALYSIS AND RESULTS UNITS USED: - persuasions based on regulations - persuasions based on social power - persuasions based on interests - positive remarks - negative remarks - procedural remarks - questions - offers of information or proposals - interruptions - residual category 21% 17% 9% 15% 5% 6% 7% 6% 6% 8%
- 37. ANALYSIS AND RESULTS • 70% of the variance in management behaviour could be explained by the value dimensions • Hypothesis 1, 3 and 4c generally supported • Hypothesis 2, 4a and 4b partially supported • 4 characteristics of an effective strategy: • The current conflict is resolved in a way that satisfies the parties in conflict, • Future-related conflicts are prevented, • The time and money spent are minimal, • The relationship between parties is preserved.
- 38. Discussion Questions What type of strategy (“Interest”, “Regulation, “Power”) would you pursue and why?
- 39. CLASS ACTIVITY Conduct the test yourselves • Two rounds • 2 volunteers for each round
Editor's Notes
- - Some domestic ones are if they span 2 or more ethnic groups
- Differences in culture between business executives—for example, between a Chinese public sector plant manager in Shanghai and a Canadian division head of a family company in Toronto– can create barriers that impede or completely stymie the negotiating process.
- - Some domestic ones are if they span 2 or more ethnic groups
- - Some domestic ones are if they span 2 or more ethnic groups
- - Some domestic ones are if they span 2 or more ethnic groups
- Differences in culture between business executives—for example, between a Chinese public sector plant manager in Shanghai and a Canadian division head of a family company in Toronto– can create barriers that impede or completely stymie the negotiating process.
- According to global negotiation experts, negotiation is not always the best way to doing business
- Differences in culture between business executives—for example, between a Chinese public sector plant manager in Shanghai and a Canadian division head of a family company in Toronto– can create barriers that impede or completely stymie the negotiating process.
- Differences in culture between business executives—for example, between a Chinese public sector plant manager in Shanghai and a Canadian division head of a family company in Toronto– can create barriers that impede or completely stymie the negotiating process.
- There are three approaches that apply to each stage of a negotiation. The first is the Traditional Approach, which focuses on getting straight to the point with minimal time and energy spent on relationship building. The party will clearly state their position, and try to persuade the other side to come to an agreement that works as much in their favor as possible. The principled approach focuses more on relationship building with the counterparty, and will attempt to identify common interests so as to work toward a mutually beneficial solution in the negotiation process. They use only objective criteria, and resist from yielding to high-pressure negotiation tactics. Lastly, we have the synergistic approach. This approach incorporates all the same characteristics of the Principled Approach, but goes a few steps further. For example, in addition to identifying common interests with the counterparty, cultural training is also included in the preparation for the negotiation. As well, they will adjust their negotiation style and pace according to their counterparty. Finally, during the agreement stages of the negotiation, they will translate and back-translate the agreement to ensure there are no miscommunications, and if necessary will renegotiate.
- Proper planning and preparation is crucial for a successful negotiation. In Adler’s “Negotiating Globally”, he describes a study on the behavior of successful negotiators which observed 48 effective negotiators in over 100 negotiations. They identified six characteristics that are made them stand-out in comparison to their less-skilled colleagues. The first is the amount of time spent planning. It was found that it didn’t matter how long you spent planning, but whether or not the time was used effectively. Secondly is exploring options. The study found that the best negotiators thought of twice the amount of potential options to resolve the issue as the average negotiators. This is because the greater the number of options that are available, the greater chance there is for success. Establishing a common ground was also deemed an essential element, with over three times the amount of time being spent on it in successful negotiations. The skilled negotiators were observed to place more focus on the long-term issues rather than short-term issues. They also set a range of objectives, as opposed to fixating on just one number. This allowed them to gain greater bargaining flexibility, resulting in more settlements. Finally, the effective negotiators focused on discussing one issue at a time, vs. the typical sequence planning approach which involves discussing point A, then point B, and so on.
- Relationship building is an extremely important factor in successful negotiations. It is an opportunity for the two parties to reach a level of comfort with one another, and further develop respect and trust. The best way to begin this process is to find common ground with one another, which will become the basis for relationship building. Another critical step is to separate the people from the problem. This strategy allows the negotiator to freely disagree or reject counterparty proposals without rejecting the people themselves. Americans in particular are known for their task orientated nature, and often spend little time getting to know the other party. They base their transactions on written contracts, supported by the U.S. legal system. Many other countries, however, do not have a trustworthy legal system, and as such place their trust in the people they are doing business with, not the contract.
- A negotiation consists of your interests, and the counterparty’s interests. Negotiators who focus on these interests, as opposed to only stating their position, tend to attain a wider range of mutually agreeable solutions. This is because stating a position only suggests a solution for one particular situation from one party’s perspective. This limits the ways in which both you and your counterparty’s needs can be met. Another common misstep is communication barriers between parties, which can significantly affect understanding and therefore the outcome of the negotiation. In these situations, it is a good idea to use a role reversal technique in order to fully understand and appreciate the other party’s point of view.
- In the persuasion stages, effective negotiators will often regard their counterparty’s issues as their own. This allows them to fully understand the party’s needs and values, pinpoint areas of similarity and difference, and generate new options based on these differences. This in turn creates solutions that are beneficial to both sides of the negotiation, allowing for everyone to feel satisfied with the decision. Often, it is even seen that the opportunities for developing mutually beneficial solutions are greater in cross-cultural negotiations than in single-culture negotiations, due to the inherent differences within the groups.
- In the fourth and final stage of the negotiation, successful negotiators always stick to using objective criteria in the process of making concessions and reaching an agreement, as opposed to using pressure tactics and tricks. These techniques only serve to diminish the relationships that have previously been built, and the ability to develop a mutually advantageous solution. Although concessions can be made at any point during a negotiation, it has been found that negotiators who make early concessions disadvantage themselves when compared to those who make concession primarily at the end of the discussions. American’s are an example of a culture who likes to discuss the issues one at a time, and make many small concessions throughout the negotiation. Asian countries, on the other hand, prefer to discuss all issue first before making any concessions. And Russians are an extreme case, in that they make little to no concessions at all, as this is typically seen as a sign of weakness, not a show of goodwill or trust.